XAUUSD Consolidating After Breakout
Gold broke out hard to begin the month, looking like it has passed the first phase of what could be a macro event from technical perspective. Since the summer of 2020 a broad wedge has been forming, and while price didn’t wedge even further towards the apex the pattern looks good nevertheless.
This sets the stage for a big-picture rally as we close out 2021 and head into a new year. In the short-term the outlook is also looking bullish within that broader context. The rip from early this month has held well, with gold moving horizontally. This is a positive.
A breakout from the consolidation above 1877 is seen as sending gold higher to the June peak at 1916. This could perhaps be a bit of a roadblock and induce another correction. We will have to watch momentum should it soon get to that point to determine how impactful that high will be.
On the flip-side, to turn the outlook negative in the near-term gold will need to make a strong break lower, but it wouldn’t be long before significant support around the recent breakout could stop selling pressure.
If we see the area around 1834 tested, it may offer a solid risk/reward entry for would-be longs. The low of a turn off support could be used for determining stops on a long position.
In any event, at the moment the outlook appears neutral at worst with a couple of bullish scenarios to think about. It will take some flipping of the script before the outlook turns decisively bearish.